SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
The Lion Brewery, Inc. (File No. 0-28282)
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(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
THE LION BREWERY, INC.
--------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of The Lion Brewery, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders (the "Meeting") of THE LION BREWERY, INC., a
Pennsylvania corporation (the "Company"), will be held on Monday,
March 24, 1997 at 4:00 p.m., local time, at East Mountain Inn,
2400 East End Boulevard, Wilkes-Barre, Pennsylvania 18705 for the
following purposes:
1. To elect the Company's six directors to serve until the
1998 Annual Meeting of Shareholders and until their successors
have been duly elected and qualified; and
2. To transact such other business as may properly come
before the Meeting or at any adjournment thereof.
Only holders of record of common stock, $.01 par value, of
the Company at the close of business on February 4, 1997, which
has been fixed as the record date for the Meeting, shall be
entitled to notice of, and to vote at, the Meeting and any
adjournments thereof.
Shareholders are cordially invited to attend the Meeting in
person. Whether or not you plan to attend the Meeting, please
sign, date and return the enclosed proxy card to ensure that your
shares are represented at the Meeting. Shareholders who attend
the Meeting may vote their shares personally, even though they
have sent in their proxies.
February , 1997
Donald J. Sutherland,
Chairman of the Board of Directors
Charles E. Lawson, Jr.
President and Chief Executive Officer
IMPORTANT
THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
THE LION BREWERY, INC.
--------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 24, 1997
--------------------------------
GENERAL
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of THE LION
BREWERY, INC., a Pennsylvania corporation (the "Company"), to be
voted at the Annual Meeting of Shareholders of the Company (the
"Meeting") to be held on March 24, 1997, at 4:00 p.m., local
time, at East Mountain Inn, 2400 East End Boulevard, Wilkes-
Barre, Pennsylvania 18705 and at any adjournment or adjournments
thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders and in this Proxy Statement.
The principal executive offices of the Company are located
at 700 North Pennsylvania Avenue, Wilkes-Barre, Pennsylvania
18705. The approximate date on which this Proxy Statement and
accompanying Proxy will first be sent or given to shareholders is
February , 1997.
VOTING SECURITIES AND VOTE REQUIRED
Only shareholders of record as of the close of business on
February 4, 1997 (the "Record Date") will be entitled to notice
of, and to vote at, the Meeting and at any adjournments thereof.
On the Record Date, there were issued and outstanding 3,885,052
shares of common stock, $.01 par value, of the Company ("Common
Stock"). Each holder of Common Stock is entitled to one vote for
each share held by such holder. The presence, in person or by
proxy, of the holders of a majority of the outstanding shares of
Common Stock is necessary to constitute a quorum at the Meeting.
The election of directors requires the affirmative vote of a
plurality of the shares of Common Stock present and voting at the
Meeting or at any adjournment thereof.
VOTING OF PROXIES
A Proxy, in the accompanying form, which is properly
executed, duly returned to the Company and not revoked will be
voted in accordance with the instructions contained therein. If
no specification is indicated on the Proxy, the shares
represented thereby will be voted for the election as directors
of the persons named herein who have been nominated by the Board
of Directors. Each such Proxy granted may be revoked at any time
thereafter by execution and delivery of a subsequent Proxy or by
attendance and voting in person at the Meeting, except as to any
matter or matters upon which, prior to such revocation, a vote
shall have been cast pursuant to the authority conferred by such
Proxy.
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<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information as of
December 27, 1996 regarding (i) the ownership of Common Stock by
each person who is known to the management of the Company to have
been the beneficial owner of more than five percent of the shares
of Common Stock outstanding on such date, (ii) the ownership
interests of each director of the Company and each nominee for
director of the Company, (iii) the ownership interests of the
executive officers and key employees of the Company and (iv) the
ownership interests of all directors and executive officers of
the Company as a group.
NAME POSITION WITH THE COMPANY
-------------------- -------------------------
Donald J. Sutherland Chairman of the Board
of Directors
Sans Peur Corporation None
c/o Quincy Partners
P.O. Box 154
Glen Head, NY 11545
Quincy Partners None
P.O. Box 154
Glen Head, NY 11545
Lion Partners Company None
L.P.
c/o Quincy Partners
P.O. Box 154
Glen Head, NY 11545
Charles E. Lawson, Jr. Chief Executive Officer,
President and Director
Patrick E. Belardi Vice President, Chief
Financial Officer and
Treasurer
Donald R. Ladhoff Vice President-Sales and
Marketing
Leo Orlandini Head Brewmaster
David Finn Vice President-Packaging
and Warehousing
Robert Covert Vice President-Logistics
Carlo A. von Schroeter Director
George W, Peck, IV Director
Thomas S. Ablum Director
BENEFICIAL OWNERSHIP
------------------------------
NAME SHARES PERCENTAGE
-------------------- ------------ ----------
Donald J. Sutherland 1,558,075(1) 40.0%
Sans Peur Corporation 1,545,184(2) 39.8
c/o Quincy Partners
P.O. Box 154
Glen Head, NY 11545
Quincy Partners 1,545,184(3) 39.8
P.O. Box 154
Glen Head, NY 11545
Lion Partners Company 1,495,184 38.5
L.P.
c/o Quincy Partners
P.O. Box 154
Glen Head, NY 11545
Charles E. Lawson, Jr. 95,701(4) 2.4
Patrick E. Belardi 17,105(5) *
Donald R. Ladhoff 10,000(6) *
Leo Orlandini 6,445(6) *
David Finn 4,293(6) *
Robert Covert 4,293(6) *
Carlo A. von Schroeter 2,200(7) *
George W, Peck, IV 1,000(8) *
Thomas S. Ablum --(9) --
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<PAGE>
NAME POSITION WITH THE COMAPNY
-------------------------- -------------------------
Henry T. Wilson Director
All executive officers and
directors as a group (11
persons)
-------------------------------
* less than one percent
BENEFICIAL OWNERSHIP
----------------------------
NAME SHARES PERCENTAGE
-------------------------- ------------- ----------
Henry T. Wilson --(10) --
All executive officers and 1,699,112(11) 42.1
directors as a group (11
persons)
--------------------------------
* less than one percent
(1) Includes (i) 1,495,184 shares of Common Stock owned by Lion
Partners Company L.P. ("Lion Partners"), (ii) 50,000 shares
of Common Stock owned by Quincy Partners and (iii)
presently exercisable options to purchase 12,891 shares of
Common Stock held by Mr. Sutherland. Mr. Sutherland is the
sole stockholder of Sans Peur Corporation, which is the
sole general partner of Quincy Partners. Quincy Partners
is the sole general partner of Lion Partners. Lion
Partners was formed for the purpose of investing in the
Company and its sole asset consists of shares of Common
Stock.
(2) Includes (i) 1,495,184 shares of Common Stock owned by Lion
Partners and (ii) 50,000 shares of Common Stock owned by
Quincy Partners. Sans Peur Corporation is the sole general
partner of Quincy Partners, which is the sole general
partner of Lion Partners.
(3) Includes (i) 1,495,184 shares of Common Stock owned by Lion
Partners and (ii) 50,000 shares of Common Stock owned
directly by Quincy Partners. Quincy Partners is the sole
general partner of Lion Partners.
(4) Includes presently exercisable options to purchase 57,251
shares of Common Stock at $1.40 per share and 35,450 shares
of Common Stock at $6.00 per share.
(5) Includes presently exercisable options to purchase 16,105
shares of Common Stock at $6.00 per share.
(6) Consists of presently exercisable options to purchase
shares of Common Stock at $6.00 per share.
(7) Does not include (i) 150,000 shares of Common Stock owned
directly by Weston Presidio Offshore Capital C.V. or (ii)
shares of Common Stock attributable to a 16.67% limited
partnership interest in Lion Partners owned by Weston
Presidio Offshore Capital C.V. Mr. von Schroeter is a
limited partner of Weston Presidio Management LP, a general
partner of Weston Presidio Offshore Capital C.V.
(8) Does not include shares of Common Stock attributable to a
4.76% limited partnership interest in Lion Partners owned
by Canbo Partners, of which Mr. Peck is the general
partner.
(9) Does not include shares of Common Stock attributable to his
1.19% limited partnership interest in Lion Partners.
(10) Does not include (i) 25,000 shares of Common Stock owned
directly by Northwood Ventures, a partnership of which Mr.
Wilson is a special limited partner, or (ii) shares of
Common Stock attributable to a 16.67% limited partnership
interest in Lion Partners owned by Northwood Ventures.
(11) Includes presently exercisable options to purchase an
aggregate of 146,728 shares of Common Stock held by the
following persons: Donald J. Sutherland (12,891); Charles
E. Lawson, Jr. (92,701); Patrick E. Belardi (16,105);
Donald R. Ladhoff (10,000); Leo Orlandini (6,445); David
Finn (4,293) and Robert Covert (4,293).
-3-
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
---------------------
A total of six directors are to be elected at the Meeting
by the holders of Common Stock to serve until the 1998 Annual
Meeting of Shareholders.
There were five meetings of the Board of Directors of the
Company held during the fiscal year ended September 30, 1996.
All directors attended 75% or more of the meetings of the Board.
Members of the Board of Directors who are not employees of
the Company receive an annual retainer of $1,500 for serving as
director and $500 per board meeting attended. The Chairman of
the Board receives $12,500 per quarter for serving in such
capacity and the Chairman of the Audit Committee receives an
additional $1,500 per year for serving in such capacity.
Directors are also reimbursed for out-of-pocket expenses incurred
in attending meetings.
Directors shall be elected by a plurality of the votes cast
at the Meeting. The names of the nominees and certain
information with regard to each nominee follows:
NOMINEES FOR DIRECTOR (TO SERVE UNTIL THE 1998
ANNUAL MEETING OF SHAREHOLDERS)
HAS SERVED
AS DIRECTOR POSITION(S) WITH THE
NAME AGE SINCE COMPANY
-------------------- --- ----------- --------------------
Donald J. Sutherland 66 1993 Chairman of the
Board of Directors
Charles E. Lawson, 46 1994 President, Chief
Jr. Executive
Officer and Director
Thomas S. Ablum 42 1993 Director
George W. Peck, IV 65 1993 Director
Henry T. Wilson 37 1993 Director
Carlo A. von 33 1996 Director
Schroeter
--------------------
DONALD J. SUTHERLAND was elected a Director and Chairman of
the Board of the Company in October 1993. Since 1975, Mr.
Sutherland has been President and sole employee of the general
partner of Quincy Partners, a buyout and management firm. Quincy
Partners is the general partner of Lion Partners, the Company's
largest shareholder. See "Certain Relationships and Related
Transactions."
CHARLES E. LAWSON, JR. joined the Company as Executive Vice
President in March 1994 and was appointed President, Chief
Executive Officer and Director of the Company in May 1994. Prior
to joining the Company, Mr. Lawson had over twenty years
experience in the beverage packaging industry and from April 1992
until March 1994 was Director of Sales of the brewery and soft
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<PAGE>
drink divisions of Riverwood International, Inc. Prior thereto
Mr. Lawson was employed by Julian B. Slevin Co., Inc. in various
capacities since 1973 and from 1988 to 1992 was its Vice
President of Sales and Marketing.
THOMAS S. ABLUM was elected a Director of the Company in
October 1993 and has been a principal in Ablum, Brown & Company,
a private investment banking firm, since February 1988.
GEORGE W. PECK, IV was elected a Director of the Company in
October 1993. Since January 1997, Mr. Peck has been a special
limited principal of Kohlberg & Co. LLC, a private merchant bank
formerly known as Kohlberg & Co. ("Kohlberg"). From 1987 until
December 1996, Mr. Peck was a general partner of Kohlberg. Mr.
Peck also serves as a director for ABC Rail Products Corp.,
Northwestern Steel & Wire Co. and ABT Building Products Corp.
HENRY T. WILSON was elected a Director of the Company in
October 1993. Since 1991, Mr. Wilson has been Managing Director
and a special limited partner of Northwood Ventures, a New York
limited partnership which invests in venture capital
opportunities. From 1986 to 1991, Mr. Wilson was employed in the
Investment Banking Division of Merrill Lynch & Co., most recently
as a Vice President.
CARLO A. VON SCHROETER was elected a Director of the
Company in May 1996. Since August 1996, Mr. von Schroeter has
been a general partner at Weston Presidio Capital, a venture
capital firm. From 1992 until August 1996, Mr. von Schroeter was
a principal at Weston Presidio Capital. Mr. von Schroeter is
also a limited partner of Weston Presidio Management LP, a
general partner of Weston Presidio Offshore Capital C.V.
OTHER DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information regarding the other
executive officers of the Company:
NAME AGE POSITION
------------------ --- -------------------------------
Patrick E. Belardi 36 Vice President, Chief Financial
Officer and Treasurer
Donald R. Ladhoff 40 Vice President-Sales and
Marketing
David Finn 46 Vice President-Packaging and
Warehousing
Robert Covert 45 Vice President-Logistics
Leo Orlandini 35 Head Brewmaster
PATRICK E. BELARDI joined the Company in October 1994 as
Vice President and Chief Financial Officer. Mr. Belardi, a
certified public accountant, was employed by Laventhol & Horwath
from 1982 to 1990 and then was a principal at Kronick Kalada
Berdy & Co., P.C., a prior accounting firm of the Company, from
1990 to October 1994.
DONALD R. LADHOFF joined the Company in March 1996 as Vice
President-Sales and Marketing. Prior to joining the Company, Mr.
Ladhoff was employed by the Canandaigua Wine Company, Inc. from
1990 through 1995. Mr. Ladhoff has 18 years experience in sales
and marketing of alcoholic beverages.
-5-
<PAGE>
DAVID FINN joined the Company in 1974 and has served as
Vice President-Packaging and Warehousing since 1990.
ROBERT COVERT joined the Company in 1974 and has served as
Vice President-Logistics since 1991.
LEO ORLANDINI joined the Company in 1988 as Quality
Assurance Manager. After attending brewing school at the Seibel
Institute of Technology in 1991, he returned to the Company and
was appointed Assistant Brewmaster in April 1992. In May 1995,
he was promoted to Head Brewmaster.
There are no family relationships between any present
director or officer and any other present director or officer.
The Company believes that, during the fiscal year ended
September 30, 1996, its executive officers, directors and holders
of more than 10% of the shares of Common Stock complied with all
Section 16(a) filing requirements.
Officers are elected annually by the Board of Directors and
serve at the discretion of the Board of Directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The AUDIT COMMITTEE, which is currently comprised of Messrs.
Ablum, Sutherland, Peck and Wilson, with Mr. Ablum serving as
chairman, recommends the selection of the Company's independent
public accountants and consults with the independent public
accountants on the Company's internal accounting controls. The
Audit Committee did not meet during fiscal 1996.
The COMPENSATION COMMITTEE, which is currently comprised of
Messrs. Peck, Wilson and Sutherland, with Mr. Wilson serving as
chairman, recommends to the Board salaries and bonuses for the
Company's officers and administers the Company's 1996 Stock
Option Plan. The Compensation Committee met once during fiscal
1996.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information
concerning all cash compensation awarded to, earned by or paid to
the Company's Chief Executive Officer during the Company's last
two fiscal years. Other than the Chief Executive Officer, no
executive officer or employee received compensation exceeding
$100,000 during the Company's last two fiscal years.
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<PAGE>
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL
POSITION YEAR SALARY BONUS
------------------ ---- ------ -----
Charles E. Lawson, Jr. 1996 $147,908 $45,000
President, Chief 1995 133,374 25,000
Executive Officer
and Director
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------------
OTHER SECURITIES
NAME AND PRINCIPAL ANNUAL UNDERLYING
POSITION COMPENSATION OPTIONS
------------------ ------------ ----------
Charles E. Lawson, Jr. $ - 106,350(1)
President, Chief 21,328(2) -
Executive Officer
and Director
---------------------
(1) Options to purchase 35,450 shares of Common Stock are
presently exercisable; options to purchase the remaining
70,900 shares vest over a two-year period.
(2) Relocation expenses.
The Company maintains a noncontributory defined benefit
pension plan covering nonunion employees. The plan provides
benefits based on years of service and compensation levels. Mr.
Lawson and other key employees of the Company participate in this
plan.
OPTION GRANTS IN FISCAL 1996
PERCENT OF
TOTAL
OPTIONS
GRANTED TO EXERCISE
NAME AND SECURITIES EMPLOYEES PRICE
PRINCIPAL UNDERLYING DURING PER EXPIRATION
POSITION OPTIONS FISCAL YEAR SHARE DATE
-------- ---------- ----------- ------- ----------
Charles E. 106,350(1) 39.6% $6.00 May 7, 2006
Lawson, Jr.,
President,
Chief
Executive
Officer and
Director
-------------------
(1) Options to purchase 35,450 shares of Common Stock are
presently exercisable; options to purchase the remaining
70,900 shares vest over a two-year period.
AGGREGATE OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR-END
OPTION VALUES
The following table provides information on the value of
unexercised stock options owned by the executive officer named in
the Summary Compensation Table as of September 30, 1996. No
options were exercised in fiscal 1996.
VALUE OF UNEXERCISED
IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS AT
OPTIONS AT SEPTEMBER 30,
SEPTEMBER 30, 1996 1996(1)
UNEXER- EXER- UNEXER-
NAME EXERCISABLE CISABLE CISABLE CISABLE
---- ----------- ------- ------- -------
Charles E. 92,701 70,900 $213,260 $ -0-
Lawson,
Jr.,
President,
Chief
Executive
Officer
and
Director
-------------------
(1) The dollar values have been calculated by determining the
difference between the fair market value of the securities
underlying the options at September 30, 1996 and the
exercise price of the options.
-7-
<PAGE>
EMPLOYMENT AGREEMENTS
Charles E. Lawson, Jr. currently is employed under an
agreement that provides for an annual salary of $155,000 and a
bonus at the discretion of the Board of Directors in
consideration for services rendered by him to the Company. Under
the agreement, Mr. Lawson is entitled to participate in all
health benefits and other employee benefit programs of the
Company, including the Company's defined benefit retirement plan,
and is provided with an automobile at the Company's expense.
Pursuant to the agreement, Mr. Lawson received options to
purchase 57,251 shares of Common Stock at an exercise price of
$1.40 per share exercisable at any time prior to 2001 provided
that Mr. Lawson is then an employee of the Company. In the event
that Mr. Lawson's employment with the Company terminates, the
agreement subjects Mr. Lawson to certain noncompetition
restrictions. Upon termination of Mr. Lawson by the Company
without cause or upon a change in control of the Company coupled
with a diminishment of responsibilities, Mr. Lawson is entitled
to two years' severance, subject to mitigation if he obtains
other employment.
Patrick E. Belardi is employed under an agreement that
provides for an annual salary of $80,000 and a bonus at the
discretion of the Board of Directors in consideration for
services rendered by him to the Company. The agreement has an
anniversary date of October 1, and is automatically renewable on
a year to year basis. Under the agreement, Mr. Belardi is
entitled to participate in all health benefits and other employee
benefit programs of the Company, including the Company's defined
benefit retirement plan. Upon termination of Mr. Belardi by the
Company without cause, Mr. Belardi is entitled to one year s
severance, subject to mitigation if he obtains other employment.
STOCK OPTION PLAN
The Company's 1996 Stock Option Plan (the "Plan") permits
the granting of options to employees and directors of the
Company. An aggregate of 400,000 shares have been reserved for
issuance under the Plan. The Plan is administered by the
Compensation Committee of the Board of Directors, which generally
has the authority to select individuals who are to receive
options and to specify the terms and conditions of each option so
granted, including the number of shares covered by the option,
the type of option (incentive stock option or nonqualified stock
option), the exercise price (which in all cases must be at least
100% of the fair market value of the Common Stock on the date of
grant), vesting provisions and the overall option term. The
Company has granted options to purchase an aggregate of 268,431
shares of Common Stock to certain officers, directors and other
key employees of the Company. All of these options vest over a
period of two years commencing on the date of grant and have an
exercise price equal to the $6.00 per share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1993, the Company entered into a Stock Purchase
and Redemption Agreement (the Agreement") among the Company, Lion
Partners Company L.P. ("Lion Partners") and William J. Smulowitz,
Rochelle P. Smulowitz, Lester S. Smulowitz and Lynn Muchnick
(collectively, the "Prior Owners"). Under the Agreement the Prior
Owners sold to Lion Partners 1,495,184 shares of Common Stock,
representing 24.5% of the then issued and outstanding shares of
capital stock of the Company (collectively the "Purchased
Shares"), for a total purchase price of $2.1 million. Immediately
following the consummation of the purchase and sale of the
Purchased Shares, the Company redeemed from the Prior Owners
4,254,165 shares of Common Stock (the "Redemption Shares"),
representing 69.7% of the then issued and outstanding shares of
capital stock of the Company, in exchange for $8.4 million, of
which $4.4 million was used to discharge in full the indebtedness
borrowed by the Company. In October 1993, the Company obtained
revolving and term loan financing from Norwest Bank Minnesota,
N.A., and term loan financing from The Marlborough
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<PAGE>
Capital Investment Fund, L.P. ("Marlborough") and Weston Presidio
Offshore Capital C.V. ("Weston") (collectively, the "Lenders") to
finance the repurchase of the Redemption Shares and for working
capital. None of the Lenders are affiliates of the Company. After
giving effect to the sale of the Purchased Shares and the
redemption, the Prior Owners owned in the aggregate 19.2% of the
Common Stock of the Company and Lion Partners owned 80.8% of the
Common Stock of the Company. Prior to this transaction, Lion
Partners had no affiliation with the Company. In connection with
the financing provided by Marlborough and Weston, the Company
issued warrants to Marlborough and Weston to purchase, for
nominal consideration, 265,391 shares and 26,174 shares,
respectively, of Common Stock. In December 1995, each of
Marlborough and Weston exercised their warrants in full.
Marlborough and Weston had the right to require the Company to
repurchase their shares of Common Stock for an amount based upon
the fair market value of the Common Stock at any time beginning
September 1998 and ending upon the occurrence of certain events.
This right was terminated upon the consummation of the initial
public offering of Common Stock in May 1996 (the "IPO"). The
Company repurchased 132,696 shares of Common Stock from Marlborough
for $950,000 upon consummation of the IPO.
MANAGEMENT AGREEMENT. In October 1993, Quincy Partners,
the general partner of Lion Partners, entered into a management
agreement with the Company (the "Management Agreement"). Under
the Management Agreement, Quincy Partners provided management
consulting services to the Company in the areas of financial
management, marketing and general management. In consideration
for services performed by Quincy Partners, the Company paid
Quincy Partners $130,000 per year. The Management Agreement
terminated upon consummation of the IPO. Following termination
of the Management Agreement, Donald J. Sutherland, President of
the general partner of Quincy Partners, has received a fee of
$12,500 per quarter for his services as Chairman of the Board of
the Company. Effective May 1996, Mr. Sutherland was granted
options to purchase 38,673 shares of Common Stock at $6.00 per
share, which shares vest over two years. The Company paid $80,000
to Quincy Partners as an advisory fee in connection with the IPO.
ANNUAL REPORT
All shareholders of record as of February 4, 1997 are being
sent together with this Proxy Statement a copy of the Company's
Annual Report on Form 10-KSB for the fiscal year ended September
30, 1996 which contains audited financial statements of the
Company for the fiscal years ended September 30, 1996 and
September 30, 1995.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholders who desire to submit proposals for inclusion
in the Company's proxy statement for the 1998 Annual Meeting of
Shareholders of the Company must submit such proposals to the
Secretary of the Company at the Company's principal office at 700
North Pennsylvania Avenue, Wilkes-Barre, Pennsylvania 18705 by
October 7, 1997.
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<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has selected Arthur Andersen LLP, the Company's
independent public accountants for the fiscal year ended
September 30, 1996, to continue as independent public accountants
of the Company. Representatives of Arthur Andersen LLP are
expected to attend the Meeting and will be available to respond
to appropriate questions. Such representatives will also be
given an opportunity to make a statement if they so desire.
In November 1995, the Company retained Arthur Andersen LLP
as its independent public accountants replacing the Company's
former auditors, Richard A. Eisner & Company LLP. There were no
disagreements with the former auditors on any matter of
accounting principles or practice, financial statements for the
fiscal year ended September 30, 1994 or up through the time of
replacement which, if not resolved to the former auditors'
satisfaction, would have caused them to make reference to the
subject matter of the disagreement in connection with their
report. Prior to retaining Arthur Andersen LLP, the Company had
not consulted with Arthur Andersen LLP regarding accounting
principles.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of
Directors of the Company does not know of any other matters to be
brought before the Meeting other than as set forth in this Proxy
Statement and the time for such matters to be presented by
shareholders has expired. However, if any other matters not
mentioned in the Proxy Statement are properly brought before the
Meeting or any adjournments thereof, the persons named in the
enclosed Proxy or their substitutes will have discretionary
authority to vote proxies given in said form, or otherwise act,
in respect of such matters in accordance with their best
judgment.
All of the costs and expenses in connection with the
solicitation of proxies will be borne by the Company. In
addition to solicitation of proxies by use of mails, directors,
officers and employees (who will receive no compensation therefor
in addition to their regular remuneration) of the Company may
solicit the return of proxies by telephone, telegram or personal
interview.
It is important that proxies be returned promptly.
Shareholders are, therefore, urged to fill in, date, sign and
return the Proxy immediately. No postage need be affixed if
mailed in the enclosed envelope in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
DONALD J. SUTHERLAND
Chairman of the Board of Directors
CHARLES E. LAWSON, JR.
President and Chief Executive Officer
February , 1997
-10-
<PAGE>
PROXY CARD
THE LION BREWERY, INC.
ANNUAL MEETING OF SHAREHOLDERS - MARCH 24, 1997
The undersigned hereby appoints Charles E. Lawson and
Patrick E. Belardi, and each of them, proxies with powers of
substitution each, for and in the name of the undersigned to vote
all shares of Common Stock of THE LION BREWERY, INC., a
Pennsylvania corporation (the "Company"), that the undersigned
would be entitled to vote at the Company's 1997 Annual Meeting of
Shareholders (the "Meeting"), and at any adjournments thereof,
upon the matters set forth in the Notice of Meeting as stated
below, hereby revoking any proxy heretofore given. In their
discretion, the proxies are further authorized to vote upon such
other business as may properly come before the Meeting.
The undersigned acknowledges receipt of the Notice of
Meeting and the accompanying Proxy Statement and Annual Report on
Form 10-KSB.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS. THE
BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
DIRECTORS LISTED BELOW.
Election of Directors for all nominees listed below
(except as indicated)
[ ] FOR [ ] WITHHOLD AUTHORITY
The nominees of the Board of Directors are:
Donald J. Sutherland
Charles E. Lawson, Jr.
Thomas S. Ablum
George W. Peck, IV
Henry T. Wilson
Carlo A. von Schroeter
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), write the name(s) of such nominee(s) in the space
provided below:
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<PAGE>
This Proxy, when properly executed, will be voted in
the manner directed herein by the undersigned shareholder. If no
direction is made, this Proxy, when properly executed and
returned, will be voted "FOR" the election of the six named
individuals as directors.
Dated:
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Signature
----------------------------
Name
PLEASE SIGN YOUR NAME EXACTLY AS IT
APPEARS HEREON. IF THE STOCK IS
REGISTERED IN MORE THAN ONE NAME,
EACH JOINT OWNER SHOULD SIGN
PERSONALLY. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, GIVE YOUR FULL
TITLE AS IT APPEARS HEREON. ONLY
AUTHORIZED OFFICERS SHOULD SIGN FOR
A CORPORATION.
PLEASE SIGN, DATE AND MAIL THIS
PROXY IMMEDIATELY IN THE ENCLOSED
ENVELOPE.